STAFF WRITER
The Namibia Business Review (NBR) engages Electricity Control Board Chief Executive Officer, Robert Kahimise (RK) on regulations of the green hydrogen industry, dealing with NamPower’s monopoly in the sector and efforts being made to achieve fair pricing for electricity in the future
NBR: Namibia is transitioning towards establishing a synthetic energy hub through the regulated production of green hydrogen. Please give us an oversight on how power generation from this new industry will be regulated?
RK: The Electricity Act No 4 of 2007 (Electricity Act) regulates the generation, transmission, distribution and trading of electricity in Namibia. The Electricity Control Board (ECB) is responsible for regulating activities in the electricity sector, including the issuance of generation licences.
The production process of green hydrogen involves the generation of electricity using renewable energy sources such as solar, wind or hydropower. This process must be done in accordance with the provisions of the Electricity Act.
Prospective green hydrogen developers will, therefore, have to apply to the ECB for a generation licence for their plant, and where required, also for other regulated activities such as transmission or interconnection, if required.
NBR: Does Namibia have standing legislation to regulate this industry? Please give us a brief on it.
RK: With regard to the regulation of electricity-related activities of green hydrogen developers, the regulatory framework established under the Electricity Act of 2007 provides for an adequate regulatory framework. In addition, the Renewable Energy Policy (2016) supports the development of renewable energy projects and provides guidance on regulatory and market structures to encourage investment in renewable energy sources.
NBR: The prices of bulk electricity tariffs have been on an upward trajectory over the past few years. What role does ECB play in ensuring that consumers in Namibia can afford power in their homes?
RK: The Electricity Control Board plays a crucial role in ensuring that electricity remains affordable for consumers in Namibia. This role involves a combination of developing regulatory tools, regulatory oversight, tariff design principles, specific support mechanisms. The foundational principle of Namibia’s tariff methodology is cost-reflectivity, meaning tariffs should generate revenue to cover the costs of providing electricity distribution services.
Tariff Review Process
The ECB’s core mandate is to regulate tariffs in alignment with government policy. This involves regulating the overall tariff levels, meaning the amount of revenue a distributor can generate. This process involves carefully monitoring the total cost of grid-supplied electricity with the explicit aim to arrest ongoing year-on-year price escalations. This is vital because Namibia’s electricity cost is high compared to regional prices, impacting the country’s competitiveness.
The ECB is also reviewing the current tariff methodology and licensee’s performance management framework to shift into performance-based multi-year pricing.
These tools would enable the ECB to assess the utilities’ performance annually, based on targeted key performance indicators (KPls). It would penalise and incentivise utilities based on their performance.
ECB hopes that these tools would improve operational efficiency and customer service delivery by the utilities.
Net Metering (2015) Rules allow consumers to reduce their electricity bill by generating electricity for own consumption and receiving credits, by feeding the excess energy into the grid, using renewable energy technologies.
Through the modified single buyer market (MSB) model (2019), the ECB aims to introduce more competition in the electricity generation market. Increased competition can lead to more competitive pricing and lower electricity costs for c o n s u m e r s.
National Electricity Support Tariff Mechanisms
The ECB developed the National Electricity Support Tariff (NEST) mechanism in 2014, which was approved by the Cabinet in 2016, specifically to provide financial relief to low-income domestic electricity consumers through a subsidised tariff. NEST was initiated to address affordability. The ECB is assessing the viability of implementing this initiative nationwide.
ECB also engages with stakeholders, including government entities, private sector participants, and consumers, to ensure that tariff decisions are transparent and consider the views of all parties involved.
NBR: As a regulator, how vital is your role in making sure that electricity is distributed at cost- reflective prices and also accommodates the financial situation faced by home consumers?
RK: ECB is essential in maintaining a balance between the affordability of electricity for households and cost-reflective pricing. Cost-reflective tariffs guarantee that distributors recover their allowable costs, while affordability safeguards vulnerable consumers from exorbitant price increases.
ECB ensures that prices reflect actual cost drivers while minimising unjustified cost increases by regulating overall tariff levels, designing cost-reflective tariffs, and managing cross-subsidies. ECB further ensures that through a gradual tariff path, tariffs are designed to avoid sudden price shocks. ECB also developed NEST, which offers targeted subsidies to low-income households using an inclining block tariff structure.
ECB also ensures that utilities provide reliable information to inform regulatory decisions, promotes efficient electricity usage, and monitors levies. Essentially, ECB guarantees the financial sustainability of the electricity sector while also ensuring that electricity price is affordable, particularly for low-income consumers.
NBR: As a regulator, what are you doing to encourage the participation of Independent Power Producers in the national grid?
RK: The Electricity Control Board actively encourages the c of IPPs in the national grid to enhance energy security and diversify the energy mix.
Here are some of the key initiatives and measures taken by the ECB to support IPP participation:
IPP Policies
ECB supports the participation of IPPs in the market through this policy. The IPP policy provides clear guidelines and processes for IPPs to enter the market. This includes licensing procedures, a tariff methodology, technical and safety standards, compliance requirements and a level playing field for all participants in the market.
Engagement and Collaboration
ECB engages with stakeholders, including IPPs, g o v e r n m e n t entities and financial institutions to address challenges and opportunities in the sector. This collaborative approach helps identify and overcome barriers to IPP participation.
Alignment with National Policies
ECB ensures that IPP initiatives align with national energy policies, such as the National Integrated Resource Plan (NIRP) and Renewable Energy Policy. This alignment helps create a coherent strategy for integrating IPPs into the national energy landscape.
By implementing these measures, ECB aims to create an enabling environment for IPPs to contribute to Namibia’s energy supply, increase renewable energy capacity, and promote sustainable development.
NBR: How best can Namibia deal with the current monopoly by NamPower (a state -owned institution) in future and encourage other players?
RK: To address NamPower’s monopoly and encourage more players in the electricity supply industry, Namibia transitioned from a single buyer (SB) model to a modified single buyer (MSB) market model. This shift currently allows large electricity customers and IPPs to transact directly through bilateral agreements, allowing for an opportunity for price competition from different suppliers in the market, and breaking NamPower’s sole off-taker role.
MSB is being rolled out in phases, gradually opening the market to more participants while managing risks. It introduces self-dispatch for private generators, wheeling charges, tariff unbundling, and new services like energy banking. NamPower’s role is evolving to that of a balancing agent and supplier of last resort.
ECB oversees this reform, ensuring fair access, regulation, and market readiness. The end goal is a competitive and investor-friendly market that improves energy security, reduces costs and promotes local generation, especially from renewables.
NBR: How do you ensure that power producers abide by the country’s legal framework in terms of power production as well as balancing that with affordability of power?
RK: To ensure that power producers abide by Namibia’s legal framework while balancing affordability, ECB employs several strategies:
Licensing and Compliance
Power producers are required to obtain licences from ECB, which stipulate the conditions they must adhere to. ECB monitors compliance with these conditions to ensure that power producers operate within the legal framework.
Regulatory Oversight
ECB conducts audits and inspections to ensure that power producers comply with technical, safety, and environmental standards as outlined in the Namibia Electricity Safety Code (NESC) and other regulations.
Tariff Regulation
ECB reviews and approves electricity tariffs to ensure they are cost-reflective and fair. This process involves assessing the cost structures of power producers to ensure that tariffs allow for a reasonable rate of return while considering consumer affordability.
Monitoring and Reporting
ECB requires power producers to submit regular reports on their operations, financial performance and compliance with regulatory requirements. This information is used to assess their adherence to the legal framework and identify any issues that may affect affordability.
Stakeholder Engagement
ECB engages with stakeholders, including power producers, consumers, and government entities, to gather input and ensure transparency in regulatory processes. This collaborative approach helps balance the interests of all parties involved.
Incentives for Efficiency
ECB encourages power producers to adopt efficient technologies and practices that reduce costs and improve affordability.
This includes promoting renewable energy projects and supporting demand-side management.
Enforcement Mechanisms
ECB has the authority to enforce compliance with regulations through penalties, fines or other measures if power producers fail to meet their obligations. This ensures accountability and adherence to the legal framework.
By implementing these strategies, ECB aims to ensure that power producers comply with Namibia’s legal framework while providing affordable and reliable electricity to consumers.
NBR: How have you ensured that the licence issuance regulation allows local independent power producers to play their part in the country?
RK: ECB has taken several steps to ensure that the licensing regulations facilitate the participation of local IPPs in the country’s electricity sector:
Streamlined Licensing Process
ECB has worked to simplify and streamline the licensing process for IPPs. This involves providing clear guidelines and requirements for obtaining licences, which reduces administrative barriers and encourages local participation.
Transparent Criteria
ECB ensures that the criteria for licence issuance are transparent and accessible to all potential applicants. This transparency helps local IPPs understand the requirements and increases their compliance level with them.
Capacity Building and Support
ECB offers support and capacity-building initiatives to help local IPs navigate the regulatory environment. This includes workshops, training sessions and informational resources that assist IPPs understand the licensing process and regulatory requirements.
Incentives for Local Participation
ECB encourages local participation in the IPP projects. This approach promotes the involvement of Namibian businesses and communities in power generation projects.
Support for Renewable Energy
ECB promotes the development of renewable energy projects, which provides opportunities for local IPPs to enter the market. This includes initiatives such as feed-in tariffs, net metering, and competitive bidding processes for renewable energy capacity. By implementing these measures, ECB aims to create an enabling environment for local IPPs to participate in Namibia’s electricity sector, contributing to energy security and sustainable development.
NBR: What do you think can be the best solution for Namibia from a regulatory point of view t o reduce reliance o n p o w e r imports?
RK: From a regulatory perspective, Namibia is actively reducing its reliance on power imports through the ongoing implementation of the MSB model and the rollout of key policy reforms that promote local generation and long- term energy security.
The Electricity Control Board, in collaboration with the Ministry of Industries, Mines and Energy, is driving this transformation through several strategic initiatives:
- Implementation of the MSB Model: The MSB framework is already being rolled out in phases, enabling direct transactions between large consumers and IPPs. This is opening the market to competition, encouraging private investment, and laying the foundation for a more self-sufficient electricity sector.
- Promotion of Local Generation: Regulatory frameworks and incentives are in place to support the expansion of local power generation, with a strong focus on renewable energy such as solar, wind, and biomass. Numerous renewable projects are already operational or in the pipeline, helping to displace imports and diversify the energy mix.
Development of Baseload Power: Efforts are underway to support the development of local baseload generation capacity, including options such as natural gas and other viable technologies. These projects aim to ensure stable,
reliable supply and further reduce Namibia’s dependence on
imported electricity.
- Policy Alignment and Implementation: The ongoing execution of the
National Energy Policy, Electrification Policy, and Integrated Resource Plan (IRP) is strengthening the regulatory environment and providing clear guidance for investment and development in the sector. ECB recommends that the upcoming Ministerial Determination include a baseload option to ensure medium- to long-term security of supply by reducing imports.
- Regional Cooperation: While focusing on self-sufficiency, Namibia continues to actively engage in regional power trading and infrastructure collaboration through platforms such as the Southern African Power Pool (SAPP). This ensures flexibility, energy security, and access to competitive energy sources when needed.
NBR: What is being done to make sure that Namibia regulatory framework, in terms of power generation and distribution, is in alignment with international and regional standards?
RK: To ensure that Namibia’s regulatory framework for power generation and distribution aligns with international and regional standards, several measures are being undertaken:
Adoption of Best Practices
Namibia’s regulatory framework incorporates international best practices in electricity regulation. This includes guidelines from global organisations and frameworks such as the World Bank’s Handbook for Evaluating Infrastructure Regulatory Systems, which emphasises regulatory independence and effectiveness. ECB regularly participates in the Electricity Regulatory Index (ERI) facilitated by the African Development Bank, and it provides an in-depth oversight on how the ECB is faring against peers in Africa.
ECB ranked fourth in the ERI.
Regional Cooperation
Namibia is a member of the Southern African Development Community (SADC) and has adopted the SADC Protocol on Energy. This protocol and related strategic plans provide a framework for regional energy cooperation and alignment with regional standards.
International agreements, such as the Paris Climate Agreement, also influence the country’s energy policies and regulatory framework. These commitments guide the development of regulations that support sustainable and clean energy practices.
Engagement with Regional Organisations
Namibia actively participates in regional energy organisations and initiatives, such as SAPP. This engagement helps align the country’s regulatory framework with regional standards and facilitates cross-border electricity trade.
Technical Standards and Codes
The Namibia Electricity Safety Code and other technical standards are regularly updated to reflect international standards.
This ensures that power generation and distribution systems meet global safety, reliability, and efficiency criteria.
Capacity Building and Knowledge Exchange
ECB engages in capacity-building initiatives and knowledge exchange with international and regional counterparts. This helps incorporate global trends and innovations into the national regulatory framework.
Policy and Regulatory Reviews
Regular reviews and updates of energy policies and regulations are conducted to ensure alignment with international and regional developments. This includes the ongoing development of new legislation, such as the Namibia Energy Regulatory Authority Bill.
By implementing these measures, Namibia aims to maintain a regulatory framework that is in harmony with international and regional standards, promoting a sustainable and competitive electricity sector.
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